Thursday, June 30, 2016

Of course one could just do the math but this is more interesting than my saying $1.3300 last, $1.3242 daily low after Carney spoke.
From Curbed:

Welcome back to Period Dramas,
a weekly column that alternates between roundups of historic homes on
the market and answering questions we’ve always had about older
structures.

One week ago today, the United Kingdom voted to leave the
European Union. The historic decision precipitated an onslaught of
stories detailing its political and economic ramifications—not least of which being its effect on the value of the British Pound.

Within a day, the value of the British Pound plunged to its lowest level
in over 30 years, falling from $1.50 before the votes were counted to
$1.35 as the results came in. The Pound has continued to waver in
place: Today its value is around $1.32.

While some people have talked about how, suddenly, the
United Kingdom is more affordable than ever for visiting Americans, we
at Period Dramas can’t help but turn our eyes toward British country
houses. How much cheaper are these historic estates? We decided to put
the numbers to the test and examine how Brexit has affected their value.

Trafalgar Park (8 bedrooms, 33 acres of land)

Price before Brexit (with £1 = $1.50): £12,000,000 or $18,000,000

Price now: $15,840,000

Set in the town of Downton (really—we kid you not), Trafalgar Park
is arguably the most architecturally significant house we’ll take a
look at today. If its immense curb appeal (is it appropriate to use the
phrase "curb appeal" to describe a 35,000-square-foot historic house?)
didn’t tip you off, its official Grade I listing will.

Similar to being registered with the National Historic
Landmarks program in the states, being listed with a certain grade in
the U.K. denotes how special—and protected—a certain building is. Grade I
buildings are the highest grade possible.

Built in the mid-1700s (between 1733 and 1766 or later)
for aristocrat Sir Peter Vanderput, the mansion is a Neoclassical dream
out of Regency England: The floorplan is symmetrically organized with
absurdly grandiose rooms in both scale and appointment.

While all of its rooms are worth writing about, we have
to highlight the music room with its mural, designed by G.B. Cipriani,
and its impressive two-story central hall with an inlaid floor, vaulted
ceiling, and intricately carved decorations over the doors and
mantlepiece. Even the areas of the house that need work (one of the
wings is in disrepair) are perfectly lovely, with romantically shabby
plasterwork and Doric columns....

Today's winner of the prestigious CLoD is brought to us by DealBreaker.
DealBreaker, for when reality just isn't funny enough.

“Now even if those two candidates had the same expected return —
which I doubt — but even if Trump’s was as good as Hillary’s, his
volatility is so enormous that his Sharpe ratio is terrible,” Simons
said....

There are 900 deals under way on China's One Belt One Road initiative.
The deals are worth $890 billion, such as a gas pipeline from the Bay
of Bengal through Myanmar to south-west China and a rail link between
Beijing and Duisburg, a transport hub in Germany. China says it will
invest a cumulative $4 trillion in OBOR countries, though it does not
say by when. Its officials tetchily reject comparison with the Marshall
Plan which, they say, was a means of rewarding America’s friends and
excluding its enemies after the second world war. OBOR, they boast, is
open to all. But, for what it is worth, the Marshall Plan amounted to
$130 billion in current dollars.

President Xi’s chief foreign adviser, Yang Jiechi, has tied OBOR to
China’s much-touted aims of becoming a “moderately well-off society” by
2020 and a “strong, prosperous” one by mid-century.

Mr Xi seems to see the new Silk Road as a way of extending China’s
commercial tentacles and soft power. It also plays a role in his broader
foreign-policy thinking. The president has endorsed his predecessors’
view that China faces a “period of strategic opportunity” up to 2020,
meaning it can take advantage of a mostly benign security environment to
achieve its aim of strengthening its global power without causing
conflict. OBOR, officials believe, is a good way of packaging such a
strategy. It also fits with Mr Xi’s “Chinese dream” of recreating a
great past. It is not too much to say that he expects to be judged as a
leader partly on how well he fulfils OBOR’s goals.

Third, OBOR matters because it is a challenge to the United States and
its traditional way of thinking about world trade. In that view, there
are two main trading blocs, the trans-Atlantic one and the trans-Pacific
one, with Europe in the first, Asia in the second and America the focal
point of each. Two proposed regional trade deals, the Trans-Pacific
Partnership and the Transatlantic Trade and Investment Partnership,
embody this approach. But OBOR treats Asia and Europe as a single space,
and China, not the United States, is its focal point.

In April a Chinese shipping company, Cosco, took a 67% stake in Greece’s
second-largest port, Piraeus, from which Chinese firms are building a
high-speed rail network linking the city to Hungary and eventually
Germany. In July work is due to start on the third stage of a
Chinese-designed nuclear reactor in Pakistan, where China recently
announced it would finance a big new highway and put $2 billion into a
coal mine in the Thar desert....MORE

Room-rental service pitches big investors to raise new round of at least $500 million

Airbnb Inc. lined up investors for a new funding round and an
employee stock sale that will value the room-rental website at up to $30
billion and help defer an initial public offering, said people familiar
with the matter.

The San Francisco company plans to raise
between $500 million and $1 billion from more than a half dozen large,
investors in the coming weeks, the people said. The deal is expected to
value Airbnb at about $30 billion, up from $25.5 billion a year ago.

One of the people familiar with the deal later clarified the company expects to raise up to $750 million.

In
a separate transaction, investors are planning to buy about $200
million in stock from Airbnb employees, one person said. Because those
investors will be purchasing common shares, rather than preferred shares
which grant certain investor protections, the employee stock sale is
expected to value Airbnb at less than $30 billion, the people said.

That transaction could value Airbnb as low as $25 billion, one of the people familiar with the deal said.

Airbnb designed the double-barrel deals to relieve some of the
pressure to go public. By adding new cash, it can continue to spend on
its global expansion; and by cashing out longtime employees, it can
reward and retain top talent without an IPO. Over 500 of Airbnb’s
roughly 2,500 employees are eligible to sell shares, according to one
person familiar with the deal.

Airbnb has already selected
investors and expects both deals to close this summer. It is unlikely to
pursue an IPO in 2016 or 2017 as it continues to expand aggressively,
the person said....MORE

The article says helium is derived from natural gas. This is incorrect. As one of the noble gases He doesn't react with much of anything so more correctly helium can be found in proximity to methane.

From OilPrice:

There’s a global helium shortage. It’s
not among the widely publicized problems of the world, but there is
undoubtedly a helium deficit – the noble gas that most of us associate
with party balloons and funny squeaky voices.

Outside parties, helium is essential in magnetic resonance imaging
(MRI) because it helps to cool the machine’s superconductive magnets. It
is also invaluable in the space industry to clean rocket engines, keep
satellite tools cool, and to pressurize the inside of rockets running on
liquid fuel. It’s also used to condense hydrogen and oxygen and turn
them into rocket fuel.

Even a thing as simple as a barcode reader in a supermarket has helium in it.

Reserves, however, are not exactly abundant – helium is traditionally
derived from natural gas in moderate quantities. Now, with growing use
in medicine and space, helium reserves are dwindling and replacement is
difficult. But a new exploration approach has revealed a potentially
huge deposit of the noble gas in Tanzania, raising hopes that the
shortage can be dealt with.

A team from Oxford and Durham universities, who worked with Norwegian exploration firm Helium One, recently announced
they had come across a deposit of helium in Tanzania’s Rift Valley.
Reserves in this deposit may be as much as 54 billion cubic feet (bcf)
and possibly even more. Global annual consumption of helium is around 8
bcf.

The team focused their attention on volcanoes in the Rift Valley and
studied seismic images of gas-trapping rock formations—that is, they
tried to find helium away from gas deposits. The research showed that
volcanic activity produces sufficient heat to release helium from rock
formations and trap it in deposits nearer the surface of the earth....MORE

From time to time we try to remind the youth of America where future opportunity lies. This one is from May 2:

As a side note, the Saudis have hired former British Prime Minister Tony Blair for a pretty nice deal.
As I tell the young people, if you want to make real money go into politics....

From Yahoo Finance:

Billionaire hedge fund manager
Leon Cooperman, the founder of $5.2 Omega Advisors, said young people
should perhaps look at a different industry than fund management.

“Maybe some of the young people
should look into going into different industries...because I think our
industry is in turmoil. It’s very ironic because you’ve got [Hillary]
Clinton and [Bernie] Sanders crapping all over us and they don’t realize
Wall Street is in the midst of a very serious downturn,” Cooperman, 73,
said at the Benjamin Graham Conference hosted by the New York Society
of Securities Analysts (NYSSA) in Midtown Manhattan on Wednesday.

Cooperman, who’s been running Omega for twenty-five years, told the
crowd he recently attended a seminar on income disparity where a
futurist spoke.

"Before I tell you what [the
futurist] said: I’ll quote Warren Buffett who said: ‘The forecast of the
future will tell you more about the forecaster than they’ll tell you
about the future.’ The futurist said — his opinion was the biggest
problem facing the economy in the next decade was that 45% of jobs being
performed in the economy were going to be replaced by automation and
there would be no alternative work for the displaced workers.”

After thinking about those comments, Cooperman realized that it has some significance for fund management.

“I recognized the potential
significance for our industry. And the significance is… passive asset
management turnover rate is 3% a year. Active asset management turnover
is approximately 30% per year. So if more money goes passive versus
active, liquidity in the market is going to diminish because there’s
less trading. And the available pool of commission dollars to support
Wall Street firm is going to diminish…” he said.

On the hedge fund side, Cooperman said there’s going to be ‘tremendous downside pressure on fees.’...

I don't know if it's traders or politicians that got me thinking along these lines but the BPS is on to something by pointing this out.

From the British Psychological Society's Research Digest blog:

Depression is complex and influenced by many factors, but the way
depressed people think is a likely contributor to the disorder.
Depression is often associated with cognitive biases, including paying
more attention to negative than positive events and recalling them more
easily. People with depression also tend to ruminate over perceived
failures and criticism, and they are extra sensitive to negative
feedback.

Analogous cognitive biases can be found in animals. Now, in a new study,
researchers have demonstrated for the first time a link between
pessimism and sensitivity to performance feedback in rats. It’s the
latest finding to show parallels between human depression and rat
pessimism – an important result that lends further legitimacy to using
animal research to shed light on human psychological problems.

You might wonder how on earth it is possible to measure pessimism in rats. One way to do this was shown in a 2004 study
in which animals were trained to press a lever to receive a food reward
in response to hearing one tone, and to press a different lever to
avoid a mild electric shock upon hearing a different tone. Then the
scientists presented the animals with intermediate tones, in between the
ones that signaled either food or shock. Which lever the rats pressed
in response to these ambiguous cues was considered an indicator of
whether the animals expected a positive or negative event. In other
words, their behaviour revealed their relative optimism or pessimism.

In the new research, Rafal Rygula and Piotr Popik of the Polish Academy
of Sciences used the same paradigm to compare the reaction of rats
displaying optimistic and pessimistic traits to positive and negative
feedback. First, they divided rats into two groups based on how they
performed in the ambiguous-cue interpretation test. Some rats tended to
interpret ambiguous cues as signaling a reward, indicating a positive
cognitive bias, while others were more likely to interpret them as
signaling punishment, indicating a bias toward more pessimistic
judgments.

Then the optimistic and pessimistic rats were trained and tested in a
probabilistic reversal-learning (PRL) task, which essentially involves
using negative or positive feedback to teach the animals to change or
maintain a response that they’ve learned previously. Rygula and Popik
determined how likely each rat was to switch its response after
receiving negative feedback and to maintain its response following
positive feedback....MORE

We aren't that bearish, expecting a slight undercut of the old low to shake out hot money, but the points Shilling raises to get to $10 are worth thinking about.
WTI $49.37, off 51 cents last.

From Bloomberg View, June 28:

Back in February 2015, the price of West Texas Intermediate stood at about $52 per barrel, half of its 2014 peak. I argued then that
a renewed decline was coming that could drive it below $20, a scenario
regarded by oil bulls as unthinkable. But prices did fall further,
dropping all the way to a low of $26 in February. Since then, crude
rallied to spend several weeks flirting with $50 per barrel, a level not
seen since last year. But it won't last; I’m sticking to my call for
prices to decline anew to $10 to $20 per barrel.

Recent gains have little to do with the fundamentals that led to the collapse in the first place. Wildfires
in the oil-sands region in Canada, output cuts in Nigeria and Venezuela
due to political unrest, and hopes that American hydraulic fracturing
would run out of steam are the primary causes of the recent spurt.

But
the world continues to be awash in crude, and American frackers have
replaced the Organization of Petroleum Exporting Countries as the
world’s swing producers. The once-feared oil cartel is, to my mind,
pretty much finished as an effective price enforcer. Even OPEC’s leader,
Saudi Arabia, is acknowledging the new reality by quashing recent
attempts to freeze output, borrowing from banks and preparing to sell a stake in its Aramco oil company as it tries to find new sources of non-oil revenue.

The
Saudis and their Persian Gulf allies continue to play a desperate game
of chicken with other major oil producers. Cartels exist to keep prices
above equilibrium, which encourages cheating as cartel members exceed
their allotted output and other producers take advantage of inflated
prices. So the role of the cartel leader, in this case Saudi Arabia, is
to cut its own output, neutralizing the cheaters to keep prices up. But
the Saudis suffered market-share losses from their previous production
cuts. OPEC has effectively abandoned restraints, with total output
soaring to as high as 33 million barrels per day at the end of last
year:

Iran, freed of Western sanctions, plans to double output to 6 million
barrels a day by 2020, which would make it the second-largest OPEC
producer behind Saudi Arabia. Russia continues pumping to support its
economy after the collapse in oil prices devastated government revenue
and export earnings. War-torn Libya is also ramping up production as
best it can.

The International Energy Agency predicts that even
with a successful OPEC production freeze, if U.S. frackers cut
production by 600,000 barrels a day this year and a further 200,000
barrels per day in 2017, excess supply would run at 1.5 million barrels a
day until 2017. That’s a continuation of the recent oversupply of 1 to 2
million barrels a day.

The price at which major producers chicken
out and slash production isn’t determined by the prices needed to
balance the budgets of oil producing nations, which are as high as $208
per barrel in Libya and as low as $52 per barrel in Kuwait. Nor is it
the "full cycle" or average cost of production that includes drilling
costs, overheads, pipelines, etc.

In a price war, the chicken-out point is the price that equals the marginal cost of producing oil from an established well....MORE

The global capital markets have quieted
considerably since the start of the week. Month and quarter-end considerations
appear to be playing a role. Also, there is a sense it will take some
time to sort things out. Perhaps the biggest surprise is how ill-prepared
the leave camp was for its victory. There was no game plan. There
is no agreement on who should replace Cameron. The leave camp is in disarray with some of the
leaders turning on each other (e.g. Johnson, Gove, Farge). There is even
confusion of whether it is the Prime Minister or Parliament that invokes Article 50.

Sterling is firm. Short-covering
and buying back currency hedges.
The news stream remains poor.
Confirmation of Q1 GDP at 0.4% (2.0% year-over-year) has little
significance.
However, news of a GBP32.6 bln Q1 current account deficit is notable.
It gives a sense of the UK's funding needs. Record low interest rates
and the unclear policy outlook suggests financing it may prove difficult
at
these levels.

Sterling's intraday upticks appear to be
running out of steam ahead of $1.3500. Yesterday's high was near $1.3535, and the Monday's high was set by $1.3565.
Due to the recent wide price swings, there is little in the way of
$1.3400-$1.3450, if sterling is going to
breakdown.

The economic data from the eurozone was
relatively constructive. The preliminary June CPI rose to
0.1% from -0.1% in May. The median guesstimate was for a flat reading.
It was the first positive reading since January. About half the
increase likely comes from energy, as the core rate ticked up to 0.9% from
0.8%. Service inflation is rising 1.1% year-over-year. Food prices
are up 0.9%, and other good prices have
increased by 0.4%. It does look as if eurozone
inflation was bottomingbeforethe Brexit shock hits.

Separately, Germany reported as expected
labor report, but the surprise of the day came from May retail sales. The 0.9% gain was half again as large as the median
forecast (0.6%), and the April series was revised from 0.9% decline toonly0.3% fall. On the other
hand, note that the US branch of the largest German bank failed the Fed's
stress test, and the IMF's review warned
out the need for German bank reforms.

European equities are posting small gains. The Dow Jones Stoxx 600 is up by about 0.25%. Most sectors are higher, but consumer and health care.
The financials are flat. In Germany financials are underperforming and within that sector, banks
and diversified financials are bearing the brunt.

The euro has recorded higher lows each day
this week and higher highs since Monday. The pattern remains intact, but the
euro lacks much momentum. Support is seen
near $1.1080. This week's price action after last Friday's big leg down is a potential bearish flag pattern, which
we suspect will be exhausted in front of $1.1170....MORE

That's the wisdom of the Washington Post's Joel Achenbachin a 2008 column, "World War Five" and last seen here a week ago.

From the Press-Gazette:

The Brexit vote gave the Guardian its
“biggest traffic day ever in all regions” and drove digital
subscriptions to the Financial Times up by 600 per cent.

The result of the EU referendum on Friday
might have left the political elite in turmoil but it was a boon to
publications that devoted coverage to the historic decision.

There were more than 17m unique visitors
to theguardian.com on 24 June, almost 3m higher than the previous
largest recorded number, and 77m page views.

Meanwhile at the FT, thanks to a targeted
marketing plan that included dropping its paywall for 24 hours on
polling day last week, digital subscriptions were said to be up 600 per
over the course of the weekend (compared to an average weekend).

Speaking to Digiday,
the FT’s chief commercial officer Jon Slade said: “We dialled up our
marketing on a real-time basis. We were looking at buying patterns,
opportunities in social, and spending our marketing budgets in pretty
aggressive ways in an attempt to try and dominate a story.”...MORE

The portmanteau — a combination of “Britain” and
“exit” to reflect the nature of the U.K.’s June 23 referendum to secede
after its decades-long EU membership — was so rabidly searched on
Alphabet’s Google Inc. that it even outstripped trawling for “porn” in
the 24-hour period around the vote.

Yuh. People were so desperate to get even the most basic sense of
what just happened that they forgot to use the internet for it’s actual
purpose and instead sought out information on geopolitical financial
events.

But when you think about it, the way we talk about Brexit is rather filthy in a way that befits its new Google status…MORE

An Amazon warehouse is a flurry of activity. Workers jog around a
manmade cavern plopping items into yellow and black crates.
Towering hydraulic arms lift heavy boxes toward the rafters. And an army
of stubby orange robots slide along the floor like giant, sentient
hockey pucks, piled high with towers of consumer gratification ranging
from bestsellers to kitchenware.

Those are Kiva robots, once the
marvel of warehouses everywhere. Amazon whipped out its wallet and threw
down $775 million to purchase these robot legions in 2012. The
acquisition effectively gave Jeff Bezos, its 52-year-old chief
executive, command of an entire industry. He decided to use the robots
for Amazon and Amazon alone, ending the sale of Kiva's products to
warehouse operators and retailers that had come to rely on them. As
contracts expired, they had to find other options to keep up with
an ever-increasing consumer need for speed. The only problem was that
there were no other options. Kiva was pretty much it.

It's taken
four years, but a handful of startups are finally ready to replace Kiva
and equip the world's warehouses with new robotics. Amazon's Kiva bots
proved this kind of automation is more efficient than an all-human
workforce. The new robots being rolled out look different, partly
because the industry is still experimenting and partly because of patent
issues. Some focus on picking items off shelves, others zoom around
with touch screens. All are aimed at saving retailers money as they race
to get their wares to your doorstep as quickly as possible.

Amazon
has about 30,000 Kiva robots scuttling about its warehouses across the
globe. Dave Clark, the retailer's senior vice president of worldwide
operations and customer service, estimated the addition of the bots
reduced operating expenses by about 20 percent. According to an analysis
by Deutsche Bank, adding them to one new warehouse saves $22 million in
fulfillment expenses. Bringing the Kivas to the 100 or so distribution
centers that still haven't implemented the tech would save Amazon a
further $2.5 billion.

“To be great in e-commerce, you need to be
sophisticated inside the warehouse,” said Karl Siebrecht, chief
executive at Flexe, which bills itself as the Airbnb for warehouse
space. Amazon was the first company to confront the challenge of picking
a virtually endless variety of goods from warehouse shelves and
combining them in a single box for home delivery. Now that e-commerce is
a growing part of the retail trade, more companies are paying
attention. “The case for automation is building across the industry,”
Siebrecht said.

But it's really only Amazon that has this kind of
technology at scale, thanks in large part to Kiva. The world's
biggest retailers, including Wal-Mart Stores Inc., Macy's Inc., and
Target Corp., have yet to populate their warehouses with widespread
robotic systems. They rely on the old method—otherwise known as
humans: Hordes of pickers and packers who send boxes down conveyor
belts.

For the new breed of robot makers, the potential market is
wide open. Logistics companies that run their own warehouses started
designing automatons while ambitious engineers saw the hole Bezos blew
in the market and jumped in. One startup was even founded by former Kiva
employees. The race to automate was on.

Saving money on parking lots
The
modern warehouse is a rectangular box with 40-foot high
ceilings, loading docks on both sides, and often, thousands of parking
spaces for staff that swells during peak shopping seasons.

Lately
retailers have been demanding something new: floors that approach the
Platonic ideal of flatness, a feature that makes life easier for the
technologists managing fleets of warehouse robots.

While
automation has long been the looming threat to industrial workers,
there's reason to think their situation is about to become worse. There
were 856,000 warehouse workers in May, according to seasonally-adjusted
data from the Bureau of Labor Statistics. The average wage for those
workers is about $12 an hour, said David Egan, head of industrial
research for the Americas at commercial real estate firm CBRE Group.
Minimum wage hikes being considered and enacted nationwide could drive
labor costs higher, especially in locations close to city centers—sites
that are in high demand as retailers chase Amazon into the realm of
same-day delivery....MORE

July futures $49.05 off 12 cents.
Some folks we talk to are looking for a repeat of last year's July
downturn which started in the middle of the U.S. peak driving season but
this year may be later, something we haven't clearly
identified-probably financialization of some sort-has been levitating
prices in the face of more-than-adequate-supply....

"Now I'm known as a long-term investor and a patient guy, but that is not my idea of a big move."
-Warren Buffett

Today's headline story from ZeroHedge:

Following last night's across the board inventrory drawdown from API, DOE data was more mixed with a surpsingly large build in gasoline stocks
but bigger than expected Distillates and total crude inventory
drawdowns. Production tumbled 0.63% MoM, the biggest drop in 2 months
and back to Sept 2014 lows. Crude prices spiked above $49 for the firest time since Brexit.
API

Crude -3.86mm (-2.5mm exp)

Cushing -1.207mm (-900k exp)

Gasoline -416k

Distillates -832k

DOE

Crude -4.05mm (-2.5mm exp)

Cushing -951k (-900k exp)

Gasoline +1.367mm

Distillates -1.801mm

6th week of crude inventory draws, Distillates back into drawdown as Gasoline built....MORE

Just passing this along.
Contrary to the headline what follows isn't a 'prediction'. Rather, this is a simulation which posited drought as the pre-condition to initialize the parameters they used to game out the scenario.

The actual risk is the Pacific Decadal Oscillation going firmly into its negative phase and depending on ENSO phase (La Niña-El Niño) and the North Atlantic Oscillation phase lining up, creating very wet conditions in Ukraine and western Russia. This type of weather pattern has led to some of the most widespread crop failures in history. As noted in our intro to 2009's "Corn Prices May Enter Decade-Long Slump, Agency Says"

Watch that Pacific Decadal Oscillation. A New York Times archive search for the term "crop failure"
returns 1950 hits, with a preponderance of stories written during the
cool phase of the PDO. With the interconnectedness of the world's grain
markets, a failure anywhere would raise prices everywhere....

See PDO monthly values below the jump.

From VICE's Motherboard, June 26, 2016:

The US national security industry is planning for the impact of an
unprecedented global food crisis lasting as long as a decade, according
to reports by a government contractor.
The studies
published by CNA Corporation in December 2015, unreported until now,
describe a detailed simulation of a protracted global food crisis from
2020 to 2030.

The simulation, titled ‘Food Chain Reaction’, was a
desktop gaming exercise involving the participation of 65 officials
from the US, Europe, Africa, India, Brazil, and key multilateral and
intergovernmental institutions.

The scenario
for the ‘Food Chain Reaction’ simulation was created by experts brought
in from the State Department, the World Bank, and agribusiness giant
Cargill, along with independent specialists. CNA Corp’s Institute for
Public Research, which ran the simulation, primarily provides scientific
research services for the Department of Homeland Security and the
Federal Emergency Management Agency.

Held from November 9-10 in
2015, the “game” attempted to simulate a plausible global food crisis
triggered by “food price and supply swings amidst burgeoning population
growth, rapid urbanization, severe weather events, and social unrest.”

By 2024, the scenario saw global food prices spike by as much as 395
percent due to prolonged crop failures in key food basket regions,
driven largely by climate change, oil price spikes, and confused
responses from the international community.

“Disruptions affected
developed and developing countries alike, creating political and
economic instability, and contributing to social unrest in certain
areas,” the project’s technical report states.
The
report notes that at the end of the simulation, the teams highlighted
the important role of “extreme weather events” and “food insecurity” in
exacerbating “instances of significant internal and external migration
and social unrest.” These, in turn, greatly “contribute to conflict.”

National security
Although
the scenario was not produced as a forecast, it was designed to provide
a plausible framework to test the resilience of the national security
system from the perspective of the US government, private industry, and
civil society.

CNA Corporation is a government contractor
established in 1942 to provide scientific research for the US Navy and
Marine Corps. Its CEO, Dr. Katherine A. W. McGrady, is a scientific
analyst to the US military’s Chief of Naval Operations and the Vice
Chief of Naval Operations.

Four different organisations
commissioned CNA Corp to conduct the exercise: the World Wildlife Fund
(WWF), the Center for American Progress, giant food corporation Cargill,
which controls a quarter of US grain exports, and Mars Inc., the global
sweet manufacturer.

One outcome was a panel hosted on Tuesday by
the Center for American Progress on ‘The National Security implications
of Climate Change and Food Security’, featuring Nancy Stetson, the US
State Department’s Special Representative for Global Food Security.

From crop failure to system failure
The
game begins in 2020 with a reasonably healthy global economy and oil
prices that have now rebounded to $75 a barrel. Food prices climb
steadily due to “weather-related disruptions to agricultural
production,” affecting South and Southeast Asia, Australia, and North
America. Global crop production falls 1 percent short of expectations
leading to decreases in stock and further modest price increases.

Things get really rough after 2023 due to serious droughts and
heatwaves in China, India, Russia, and Ukraine, coinciding with oil
prices that rapidly increase to above $100 a barrel.

By 2024, heat
and drought hit the European Union, Russia, and Ukraine, while
subsiding elsewhere, triggering a food price spike “reaching 395 percent
of long-term averages,” and a global economic slowdown.

By 2027,
these conditions begin to calm only because an economic slump has
diminished demand, while high prices stimulate food production. A
respite from weather-related disruptions allows food stocks to be
re-built, and prices then come down gradually.

The game closes
with an optimistic scenario of food prices dropping from 395 to 141
percent of long-term averages and a recovering global economy.

Part of that optimistic scenario involves fortuitously massive Band
Aid-style worldwide donations to the UN’s World Food Programme, which
thankfully “leave the world well prepared to handle the catastrophe in
areas humanitarian groups can reach.” ...MORE

The PDO is a quasi-periodic ~30 year cycle of warm/cold water off the coast of the western U.S. with teleconnections to weather around the world, interacting with a dozen or so other ocean-atmosphere phenomena.
The PDO has head-faked that it was going into its cool phase a couple times in the last 15 years but never quite made it. In fact with the (now dispersed) "warm blob" off the coast of Washington state, in December 2015 the index reached its highest December reading ever and its highest reading for any month since August 1997. So it definitely hasn't gone negative yet. Here are the monthly values for the 2000's with the entire record here:

Tuesday, June 28, 2016

I bet he, at minimum, considered going with "The Economic Consequences of the Brexit".
Much as I contemplated a little alliteration.

From Ben Bernanke's Blog at Brookings:

After several days of market upset, a few reflections on last week’s momentous vote in Great Britain.

Even more obvious now than before the vote is that the biggest
losers, economically speaking, will be the British themselves. The vote
ushers in what will be several years of tremendous uncertainty—about the
rules that will govern the U.K.’s trade with its continental neighbors,
about the fates of foreign workers in Britain and British workers
abroad, and about the country’s political direction, including perhaps
where its borders will ultimately lie. Such fundamental uncertainty will
depress business formation, capital investment, and hiring; indeed, it
had begun to do so even before the vote.
The U.K. economic slowdown to
come will be exacerbated by falling asset values (houses, commercial
real estate, stocks) and damaged confidence on the part of households
and businesses. Ironically, the sharp decline in the value of the pound
may be a bit of a buffer here as, all else equal, it will make British
exports more competitive.

In the longer run, the uncertainty will dissipate, but the economic
costs to the U.K. still will exceed the benefits. Financial services and
other globally oriented industries, which depend on unfettered access
to European markets and exchanges, will come under pressure. At the same
time, the purported gains from freeing the U.K. from the heavy
regulatory hand of Brussels will be limited, because Britain will likely
have to accept most of those rules (without ability to influence them)
as part of restructured trade agreements. Immigration is unpopular in
the U.K., and slowing it was a motivation for some “leave” voters, but a
more slowly growing labor force likely would also reduce overall
economic growth.

The rest of Europe will also be adversely affected, even though
Frankfurt and a few other cities may gain finance jobs at the expense of
London. The biggest risks here are political, as has been widely noted:
In particular, markets are already beginning to price in the risk that
other countries or regions will press for greater autonomy from
Brussels. Even those sympathetic to such demands should worry that
attempts to unwind existing trade and regulatory arrangements could be
highly disruptive, as they will likely be for Great Britain. A move
toward exit by a member of the euro zone would be particularly
destabilizing, as even the possibility that a country might leave the
common currency could provoke bank runs and speculative attacks on the
country’s sovereign debt and on other countries that might be thought to
be next in line. The challenge for European leaders will be to keep the
overall integration process on track, while finding ways to meet the
concerns of potential leavers.

One issue that could be revisited is the
EU’s commitment to the absolutely free movement of people across
borders, which seems more a political than an economic principle; the
perception that the U.K. had lost control of its borders was one of the
most effective arguments for “leave,” and secessionist movements
elsewhere have also seized on the issue. [1]

Globally, the Brexit shock is being transmitted mostly through financial
markets, as investors sell off risky assets like stocks and flock to
supposed safe havens like the dollar and the sovereign debt of the U.S.,
Germany, and Japan....MORE

...Don't get me wrong, I'm all for high-speed rail, it's just that in the
U.S., in every single instance the promoters have been lying scum.
Every single time.

At one time the cost estimates had ballooned to $100 billion before huge chunks of the approved project were jettisoned, leaving just a $35 billion cost overrun.

From Bloomberg:

California's high-speed rail project increasingly looks like an
expensive social science experiment to test just how long interest
groups can keep money flowing to a doomed endeavor before elected
officials finally decide to cancel it. What combination of
sweet-sounding scenarios, streamlined mockups, ever-changing and
mind-numbing technical detail, and audacious spin will keep the dream
alive?

Sold to the public in 2008 as a visionary plan to whisk
riders along at 220 miles an hour, making the trip from San Francisco to
Los Angeles in a little over two and a half hours, the project promised
to attract most of the necessary billions from private investors, to
operate without ongoing subsidies and to charge fares low enough to make
it competitive with cheap flights. With those assurances, 53.7 percent
of voters said yes
to a $9.95 billion bond referendum to get the project started. But the
assurances were at best wishful thinking, at worst an elaborate con.

The
total construction cost estimate has now more than doubled to $68
billion from the original $33 billion, despite trims in the routes
planned. The first, easiest-to-build, segment of the system -- the “train to nowhere” through a relatively empty stretch of the Central Valley -- is running at least four years behind schedule and still hasn’t acquired all the needed land. Predicted ticket prices to travel from LA to the Bay have shot from $50 to more than $80.
State funding is running short. Last month’s cap-and-trade auction for
greenhouse gases, expected to provide $150 million for the train, yielded a mere $2.5 million. And no investors are lining up to fill the $43 billion construction-budget gap.

Now, courtesy of Los Angeles Times reporter Ralph Vartabedian, comes yet another damning revelation:
When the Spanish construction company Ferrovial submitted its winning
bid for a 22-mile segment, the proposal included a clear and
inconvenient warning: “More than likely, the California high speed rail
will require large government subsidies for years to come.” Ferrovial
reviewed 111 similar systems around the world and found only three that
cover their operating costs.
This research should surprise no one who pays attention. Even advocates acknowledge that almost all high-speed rail systems need ongoing subsidies.

But
the California High-Speed Rail Authority steadfastly maintains that its
trains will be the exception: “HIGH-SPEED RAIL IN CALIFORNIA WILL NOT
REQUIRE OPERATING SUBSIDIES,” a 2013 fact sheet
declared, in all caps. The authority has to keep up the charade or
admit to breaking the promises that persuaded voters to back the project
in the first place....MORE

I last wrote about Fedwire data two years ago. Since then, Fedwire has entered into a (nominal) recession. Is this something we need to worry about?

We should be interested in this data because Fedwire is the U.S.'s most important financial utility. Operated by the Federal Reserve, Fedwire processes payments between the nation's commercial banks using central banks money, or reserves, as the settlement medium. It accounts for a significant chunk of U.S. spending, or aggregate demand.

Below you'll see a chart of quarterly Fedwire transaction values using data back to 1992. It shows the total dollar volume sent over Fedwire each quarter:

You can see that the flow of spending conducted over Fedwire has been declining since the third quarter of 2014; a six quarter decline. How rare is it to see this degree of stagnation? To check, I've plotted Fedwire yearly data going back to 1987:

Assuming 2016 continues to trend lower (as it has in the first five months), then we are on the verge of seeing two consecutive years of declines in Fedwire transaction flows. The only other time we've seen this sort of pullback since the data starts is from 2008-2010.

What makes the current Fedwire recession especially interesting is that the go-to measure of spending, nominal gross domestic product, continues to grow, at least tepidly. Fedwire provides a much broader measure of U.S. spending than nominal GDP, which measures spending on final goods and services. To get a feel for this difference, in 2015, U.S. NGDP amounted to $17.9 trillion. Fedwire transactions came out to $834 trillion, exceeding NGDP by a factor of 40x....MORE

Wood like this can often be found on vacant land, but a Flower Mound man has been threatened with fines of up to $2 billion for storing wood on property he owned in Hunt County.

Flower Mound resident Kirk Grady owned some Hunt County property with a woodpile for about three years before he sold it in 2002.

Hunt County now wants to collect as much as $2 billion from him in fines for improper waste disposal, he says. Hunt County sued Grady in Travis County last year, and Grady is fighting back with a federal lawsuit.

Grady's Dallas attorney, Michael R. Goldman, blames the "ridiculous and unconscionable" legal action on the county's hiring of a private law firm to prosecute the state lawsuit with a contingency-fee provision. That means the law firm gets to keep a percentage of whatever is collected.

That has given the firm a perverse incentive to sue for as much money as possible, said Goldman. And critics say some elected officials could use the law to reward lawyers who give money to their campaigns, as was alleged in a Dallas case.

Such contingency-fee arrangements are legal under Texas law. The law, passed almost 50 years ago, gave local governments the authority to file lawsuits seeking civil penalties for alleged violations of the state's environmental laws.

Grady is challenging that law as unconstitutional in the federal lawsuit filed last month in Dallas.

Lawsuits spreadGoldman said there are currently about 50 such cases across Texas because law firms seeking big payouts are pitching these arrangements to mostly smaller cities and counties. He said the sales pitch is that local governments have zero risk and can earn potentially big revenue from enforcing state environmental laws.......MUCH MORE

Last seen in 2014's "Last Surviving Founding Member of The Ramones Dies
At 65"* this song was our theme song from September 2008 to March 2009,
displacing Modern English's Melt With You and/or The Scorpions Rock You Like A Hurricane for those six months:

*This piece has had numerous edits. I corrected the age in our headline,
made a note that the drummer in the video is Marky not Tommy, changed
the attendance figure for the US festival and added some timeline.
Other than that...regret the error etc.......MORE

About That Historic Collapse In Sterling: It Was "Only" The 9th Biggest Drop Going Back To 1862

Over the past several days, the financial media has been preoccupied
with the fascinating - and historic - drop in sterling which as this
site also noted, was the biggest in history. As it turns out, that is
not the case, as the data was limited by the available records on file
with major service providers such as Bloomberg and Reuters. However, if
one goes back in time, as DB's Jim Reid has done, it appears that
Friday's sterling move was rather puny by true historical comparisons.

As Reid writes, "I'm sure you've read by now that Sterling's drop on
Friday (-7.64% based on GFD data) was the largest on record against the
dollar. Think again. Although it's the biggest drop since the collapse
of the Bretton Woods system in the early 1970s there have been 8 bigger
daily down moves since 1862.

The bigger moves (with brief reasons for those within the last
century) are 1) 19 Sep 1949: (-30.41%) Pound devalued under Bretton
Woods due to economic concerns; 2) 21 Sep 1931: (-23.57%) Gold Standard
abandoned in the Depression; 3) 30 Sep 1869: (-18.75%); 4) 20 Nov 1967:
(-13.02%) Harold Wilson's famous 'pound in your pocket' devaluation to
battle the UK's economic problems; 5) 25 Mar 1863: (-10.90%); 6) 10 May
1940: (-9.79%) War related deviation from the dollar peg; 7) 25 Sep
1931: (-7.89%) A few days after the Gold Standard was abandoned, the
pound continued to depreciate although it did jump by 7.14% next day. 8)
19 June 1866: (-7.76%).

So in the >38,000 business days since 1862, Friday was only the 9th worse day for Sterling. So maybe it's not all that bad...

From the Federal Reserve Bank of New York's Liberty Street Economics blog, May 6, 2016:

Historical Echoes: Echoes, Schmechoes, This Post Only Has a Drop of History in It

You might hear: “Economy eschmonomy.” Another possibility is: “Economy
schmeconomy.” This phenomenon of repeating a word with the prefix shm-
(or sometimes “schm-”), is called shm-reduplication. It challenges the
relevance and sometimes the value of the repeated word, and examples can
be found in articles like this Newsday clip “The High End: Economy, shmeconomy — the rich still travel.”

Who cares about whether it’s eschmonomy or schmeconomy? A pair of linguists from MIT and Harvard, that’s who. This 2003 paper
describes the authors’ attempt to understand how the shm-reduplication
works (the linguistic rules that govern its use) and how the researchers
used interviews and questionnaires to investigate those rules. The
authors also review the Yiddish origins of this usage (there are
competing theories), provide a short section on the meaning of phrases
that use the reduplication, and inform us that there is a relative lack
of study of this form of reduplication (there are a few other forms).

Who loves shm-reduplication? The media; print, online, broadcast . . .
you name it. It’s a very compact linguistic device. A simple two-word
phrase can convey a wealth of information about the author (or speaker),
the audience, the object of the shm-reduplication, and the overall
situation. “Economy eschmonomy” could mean the opposite of “it’s the
economy, stupid” — phrased differently: Never mind about the economy,
this other thing (aliens from outer space, for example) is much more
important. Or it could be a more personal statement: Forget about the
economy, I’m going on a vacation (this comes up in an example below).

Some illustrative examples of shm-reduplication on the web:

Currency shmurrency
In Barron’s, columnist Alan Abelson says: “For even if Beijing were to
up the value of the yuan by as much a 15% … it wouldn't get our
somnolent factories up and smoking again. The reason is simply that what
our manufacturing workers earn in an hour, their counterparts in China
earn in a week. Currency, shmurrency, no matter how hard and how smart
our folks work, that gap is as ugly and daunting as it is yawning.”
(June 2005)

Burglars look at buildings in a different way, seeing lift shafts that
can be shimmied up and plasterboard walls to cut through. This playful
book is crammed with good anecdotes

In
June 1986, strange mechanical sounds were heard coming from the ground
around the vault of the First Interstate Bank in Hollywood. The police
and the bank’s own security staff investigated but could find nothing
wrong. The noises were dismissed as “just a rat running around inside
the walls or something”. But they continued. Sometimes there were
temporary power cuts or interruptions to the phone system. One night,
the internal muzak system started playing, scaring an employee who was
working late. Staff joked that the bank was haunted. But no one was
laughing when an employee opened the vault one day and discovered a
tunnel drilled through the floor: $172,000 in cash and $2.5m in personal
belongings had been stolen.

The three- or four-man team had driven Suzuki quad bikes through West
Hollywood’s narrow storm sewer network to access the area from below.
Then the gang, who were probably trained in mining, slowly drilled a 30
metre tunnel up into the vault. It was an extraordinarily daring heist,
the inspiration for Michael Connelly’s detective novel, The Black Echo (1992). The Hole in the Ground Gang, as it became known, was never caught.

“Their tunnel was fantastic”, a retired FBI agent tells architectural
writer Geoff Manaugh. Such devious misuses of the city’s buildings and
infrastructure are the focus of this highly original book. Burglary,
Manaugh writes, is “topology pursued by other means: a new science of
the city, proceeding by way of shortcuts, splices and wormholes”.
Burglars don’t see the city we see. They see a network of
vulnerabilities to be used for breaking and entering. They see lift
shafts that can be shimmied up, thermal cameras that can be disabled
with hairspray, and doors that can be easily opened with lockpicks.

They see plasterboard walls that can be cut through in an instant:
“like clouds, apartment walls are mostly air”. According to Manaugh,
burglars understand the architecture of the city better than anyone.
They are the “dark wizards of cities and buildings, unlimited by laws
that hold the rest of us in”.

Manaugh begins and ends his “burglar’s guide” with the man who was
responsible for “one of the most spatially astonishing crime sprees in
US history”. George Leonidas Leslie arrived in New York City in 1869,
the year construction began on the Brooklyn Bridge. A trained architect,
he was ambitious, charismatic and well-connected: he could have worked
for any of the city’s wealthiest clients. Instead he chose to use his
training “to rob the place blind”. Before his career was cut short in
1878, when he was murdered by one of his partners in crime, it was
estimated that he and his gang were responsible for nearly 80% of bank
robberies in the US.

The
“preternaturally gifted” Leslie collected “a burglar’s library of
architectural documents” and spent months and even years casing targets.
He broke into banks just to wander their corridors at night, measuring
and timing as he went. Leslie believed “the best way to commune with an
architectural space was by breaking into it”. He used this information
to build life-size models of targets in a Brooklyn warehouse, “stage
sets on which the art of burglary could be rehearsed to perfection”.
Having become an underworld architectural consultant, advising criminals
on their heists, he was, writes Manaugh, “both burglary’s patron saint
and architecture’s fallen angel”.

Leslie exemplifies Manaugh’s argument that “burglary is designed into
the city as surely as your morning commute”. To explore this
delightfully subversive idea he takes to the skies with the Air Support Division
of the LAPD, which operates the largest police helicopter fleet in the
world from a building he describes as “a kind of beached warship in the
heart of the city”. Always fascinated by new technology, he gazes
through the helicopter’s infra-red camera at “the strangely beautiful
thermal flare of human life” below, and explains how the latest radar
gadget will allow the police to see people deep inside buildings.

There are 900 miles of highway in sprawling LA, which helped to make
it the bank robbery capital of the world in the 1990s: “every city
blooms with the kinds of crime most appropriate to its form”. In the
future, Manaugh suggests, getaways will be engineered by hacking the
city: think The Italian Job but with drones used to reprogram
the lights at each intersection. Manaugh cites the example of a school
boy in Łodz, Poland, who modified his TV remote control and created a
superswitch for the city’s tram signalling system.

Having learned that the operating system of New Songdo City, South
Korea, is backed up and stored in a secret safe deposit box, he
speculates that whoever stole it could perpetrate “the heist of the
century” – its owner of the operating system to a smart city would possess the digital key to every electronic door lock, surveillance camera and bank vault. The ultimate master key.

There are some wonderful anecdotes in Manaugh’s book, such as the
hapless burglar who phoned the police when he became convinced someone
else was robbing the house he was burgling. Another burglar cut his way
through the plasterboard walls of an entire Baltimore block: “he was the
worm in the apple, eating from one unit to the next”, leaving in his
wake “a whorled halo of negative space like a vortex through which
household goods would disappear”. And then there was the man who was
caught after 10 hours crawling through the air ducts of a veterinary
clinic in an attempt to steal tranquillisers. He was naked and armed
with a flashlight and hammer, “like some surreal nudist remake of Die Hard”....MORE

I had intended to post on the book when it was published but some disaster or other was striking and I moved on to other things. HT for the reminder to Atlas Obscura who focus on a different part of the topic:

...Stewart also described how museums create choke points and funnels,
where corridors and pathways narrow to bottleneck movement, manage
circulation, or give security time to corner a fleeing criminal. This
same architectural feature can be found in casinos. However, in Nevada,
many of the first casinos dotting Las Vegas and Reno were not built with
security in mind.

“Instead, security managers now have to find a way to retroactively
build choke points into the layout and funnel everybody past
high-resolution cameras,” Jason England, a Las Vegas-based magician and
authority on casino gambling, told Manaugh, like the oddly placed
escalators at the entrance of many casinos. The result “might not be
great buildings, in an architectural sense—but they are great at taking
pictures of you.”

Manaugh spoke to Darrel Clifton, a well-respected leader in the
security world and the head of security at the Circus Circus—a
37-year-old hotel and casino in Reno, Nevada that lacks the kind of
ideal architectural design for security. Clifton has to be scrappy.
Decorations, furniture, gaming stations, and retail cash registers are
all coordinated with camera placement to ensure comprehensive views of a
space while blending into the environment as much as possible, Manaugh
wrote.

Circus Circus in Reno has 1,572
hotel rooms and a 65,000 square foot casino all of which needs to be
monitored carefully. (Photo: Ken Lund/CC BY-SA 2.0)

Clifton uses landscape architecture to his favor, selecting a
particular species of plant called trifoliate orange not for beauty, but
for creating a protective barrier—a living fence. The dense,
fast-growing thorny plant, commonly referred to as the Rambo bush, can
stop speeding vehicles and has even been used to secure U.S. military
buildings, such as missile silos and armories.

Convenient modes of transportation inside buildings manage movement,
while also providing another opportunity to track people. Escalators in
casinos and other buildings serve as an optical apparatus that
give security teams an almost 360-degree view of everyone moving through
the interior of the building.

“People will dutifully line up one behind the other and most people,
especially in the U.S., don’t walk on escalators. They’ll just stand
there even if it’s just a 20-foot ride,” Manaugh says. “It gives the
security team an extra 20 or 30 seconds to take photographs or video
footage from pretty much any side.”

These escalators at the Circus
Circus in Las Vegas (a different casino than the one Clifton operates)
give security experts the advantage of scoping out burglars. (Photo: inazakira/CC BY-SA 2.0)

An elevator is even smart enough to catch burglars. Elevators have
scales that can calculate the weight and number of people occupying the
carriage. At a casino in Reno, a security manager, who is a friend of
Manaugh's, told him that an elevator flagged a person that weighed much
more than he was supposed to and was caught with hundreds of dollars’
worth of coins hidden in his clothes....MORE

LONDON (Reuters) – British asset manager M&G Investments, the fund arm of insurer Prudential, is looking at relocating more of its operations to Dublin in the wake of a British vote to leave the European Union....MORE

And from The Waterford Whispers News, on the spot reportage:

THE IRISH coast guard has today issued a nationwide warning for the
East Coast as hundreds of thousands of British refugees risk their lives
to cross the Irish sea in an attempt to flee the impoverished and
unstable nation.

Dinghies overflowing with desperate migrants are
so far half way through their journey, many with women and children
aboard, wishing to make a new start on the Emerald Isle.

“We have rescued hundreds of people from crafts due to overcrowding,”
winchman Derek Ryan of Rescue 117 told WWN today. “It’s a terrible
situation as many of these people are only hoping for a better quality
of life in the EU”.

Taoiseach Enda Kenny has called an emergency
meeting in the Dáil this afternoon to help find a solution to the influx
of British refugees.

It is expected many of those landing on the
Irish coast will have to be quarantined, as they are not a part of the
European Union....MORE

When they’re gone, they’re gone. There’s only so many people we can
house, comfortably, under canvas in the lovely grounds of the Honourable
Artillery Company, London EC1, at the FT’s Festival of Finance. The event is this Friday. Doors open at 10am.

We already had a packed schedule. Consider how timely some of the following sessions now look:

– Martin Sandbu, FT Free Lunch Columnist, will be sitting down with Peter Praet, Chief Economist at the ECB

– Fast FT’s Katie Martin will be hosting a special Brexit discussion
with Steve Keen of Kingston Univeristy, Toby Nangle from Columbia
Threadneedle, Richard Woolnough of M&G and Mike Amey from Pimco.

– Cardiff Garcia will be talking Peak Globalisation with Charles
Kenny from the Center for Global Development, Citi’s Tina Fordham, Paul
Donovan of UBS and Diane Coyle from Enlightenment Economics.

– Ann Pettifor will be doing a presentation on The New Nationalism:
the Money Story, followed by an interactive roundtable discussion
featuring Frances Coppola, Tyler Cowen and Srinivas Thiruvadanthai.

– Hyun Song Shin will be speaking! He’s the head of research at BIS
and he’ll be joined by Helene Rey, professor of economics at the LBS,
along with Karthik Sankaran, Eurasia Group’s director of global
strategy....

The UK's decision to leave the European Union
will lead to an economic crisis more severe than what the world faced
in 2008, according to legendary investor Jim Rogers, chairman of Rogers
Holdings.

“This is going to be worse than
any bear market you’ve seen in your lifetime,” he said on Yahoo
Finance’s “Market Movers” program Monday. “2008 was bad because of debt.
The debt all over the world is much, much higher now. Stocks in the US,
for instance, have been going sideways for 18 months to 24 months.
That’s called a distribution by many people. When you have distribution
for a year and a half, it usually leads to bad things.”

Rogers
— who cofounded the Quantum Fund with George Soros in the 1970s —
believes the “leave” movement’s victory last week may threaten the
British union. While any negotiated deal may help assuage the market’s
Brexit fears, Rogers foresees a “bad case scenario” where Scotland and
Northern Ireland leave the UK and London’s clout diminishes
significantly as financial institutions move towards continental Europe.

“The UK
already has huge international debts and it has balance of trade
problems and budget problems,” he said. “The bear case is the pound
disappears. England becomes Spain or Poland or Italy or something.”

While he doesn’t see an
immediate collapse of England’s economy, Rogers anticipates a long-term
decline in the country’s prospects.

“The deterioration will continue and make stocks go down a lot,” he warned....MORE

That's technical talk for 'make stocks go down a lot'.

*Back to the living/dead line. We've used it a few times, not so much the variant ascribed to Khrushchev and nuclear war but rather, in pirate talk:

"There! That's what I think of ye. Before an hour's out, I'll stove in your old block house like a rum
puncheon. Laugh, by thunder, laugh! Before an hour's out, ye'll laugh
upon the other side. Them that die'll be the lucky ones...

If now-concerned reader had asked why I went with the pirate "living/dead" thing I couldn't have explained to save my life but it turns out there was a reason. From WikiQuote:

In Russia this quote is usually attributed to the translation of Treasure Island by Nikolay Chukovsky:
"А те из вас, кто останется в живых, позавидуют мертвым!" ("Those of
you who will stay alive will envy the dead", originally: "Them that
die'll be the lucky ones").[2]